Go-Ahead rewards shareholders as rail services worsen

The operator of Britain's most overcrowded train service caused outrage yesterday by increasing the dividend payments to shareholders by 40 per cent.

Go-Ahead, which runs some of the UK's worst performing commuter rail franchises, said it could do nothing about the chronic congestion on its Thameslink service between Brighton and Bedford – dubbed "the sardine line". But it maintains that shareholders deserved a bigger payout in order to keep pace with investors in other transport companies.

The Go-Ahead board, led by the former Whitehall mandarin who helped mastermind rail privatisation, has also awarded itself hefty pay rises despite worsening delays on all three of the group's commuter rail franchises and increased passenger complaints.

Consumer groups reacted with anger to the dividend increase, which came alongside a 60 per cent jump in interim profits to £32m for Go-Ahead, which also operates Thames Trains and South Central.

"Where is the passenger dividend?" asked Mike Hewitson, secretary of the Rail Passengers' Committee for Southern England. "Fares are increasing and services are getting worse and passengers want to know what rail companies are doing to put it right. It is all jam tomorrow."

The increased dividend for the six-month period to the end of December will cost Go-Ahead £3.6m. This compares with the £1m compensation scheme it was forced to announce for Thameslink passengers just before Christmas after a sharp deterioration in services.

Chris Moyes, Go-Ahead's deputy chief executive, denied the dividend payout was an "insult" to passengers. "We have to think about all our stakeholders and that includes shareholders," he said. "They have made it clear that our dividend policy was too conservative compared with the rest of the transport sector."

Mr Moyes also defended the salary increases handed out last year which have increased the pay of Martin Ballinger, the chief executive, to about £400,000 and his own pay to about £350,000. "Salaries do what salaries do. We have a lot of staff working hard in frustrating circumstances to provide some semblance of a service and they expect to get rewarded. We are staff as well," he said.

Go-Ahead's new chairman Sir Patrick Brown, former permanent secretary at the Department of Transport when the railways were sold off in 1996, is understood to be on a salary of £60,000 to £70,000 for his part-time job.

Sir Patrick said that until the much-delayed Thameslink 2000 project finally went ahead, "management concentrates on improving punctuality and reliability". However, the latest performance figures from the Strategic Rail Authority contradict this. The figures show that punctuality declined on all three Go-Ahead franchises between July and September, compared with the previous three months. Thameslink also recorded a 37 per cent increase in passenger complaints while complaints at Thames Trains rose by 20 per cent.

Mr Moyes blamed a large proportion of the delays on the state of the track. "The real problem with the railways today is that the network is clapped out and that is something which is way, way outside our control," he said.

He said Go-Ahead was investing £850m in 700 new carriages for South Central. However, because of a shortage of power supplies on the network, only 200 of these carriages will be able to enter service this year.

Go-Ahead's rail division made profits of £14.6m compared with £4.8m the previous year, after the takeover of the South Central franchise. Its bus division reported an increase in profits to £7.6m and Mr Moyes said Go-Ahead would be further boosted by the congestion charge in central London.

The one blackspot was the group's aviation services business which has been hit by the turmoil in the airline market. The division saw profits slip by 8 per cent to £3.3m.